We are seeing some of the same dynamics in PVC that have been prevalent in polyolefins this year with some weakness in Asia – although not as much as we are seeing for polyolefins - while markets in the US and Europe are finding enough support for prices to go back up again. As with other polymers, any possible arbitrage between Asia pricing and the West is quickly consumed by the higher container rates. PVC has seen less capacity added over the last few years compared to other polymers and while it has not seen much of a boost from the change in consumer spending patterns around packaged goods and durables (as it has more limited exposure to packaging and durables), it has benefited from strong housing demand and some initial infrastructure spending – with more to come around the globe. The blue sky scenario for PVC would be one in which some of the growing clean water issues that are emerging in many parts of the world move more to the front burner as PVC would be a major beneficiary on investments in desalination for example or simply from water infrastructure upgrades.
We maintain a preference for the PVC chain over other polymer value chains as we see a more robust fundamental story with less cyclical risk. See more in today's daily report.
Source: Bloomberg, C-MACC, August 2021
